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Institute Appeals $4.5M Cogen Fine

By Daniel C. Stevenson
Editor in Chief

Calling a $100,000 per month penalty from the Massachusetts Department of Public Utilities "arbitrary, capricious, and abusive of the department's discretion,"the Institute appealed the ruling to the Supreme Judicial Court last Thursday.

The DPU ruling, handed down earlier this month, assessed MIT a customer transition charge related to the new cogeneration power plant.

Lawyers for the Institute further charged in the appeal that the ruling violated federal law protecting cogeneration plants, exceeded the authority of the DPU, and was unprecedented.

The ruling stemmed from a petition filed lastMarch by Cambridge Electric Light Company, which is trying to recoup the costs from purchases for anticipated power consumption by the Institute.

The ruling acknowledged that Cambridge Electric "took on a lot of financial expense following state regulations on MIT's behalf," said Peter Dimond, a Cambridge Electric spokesman.

"We're very optimistic that the courts will uphold the DPU's ruling,"Dimond said.

The ruling stipulated that MIT should be liable for 75 percent of the costs that Cambridge Electric accrued when it made advance purchases of power for the Institute's future use.

The stranded cost Cambridge Electric incurred totals about $6 million. Under the ruling MIT must pay $4.5 million.

"We don't believe they have the authority to impose such a penalty on us," said Kenneth D. Campbell, director of the News Office.

The penalty is not something the Institute can afford, he said. "When you compare an additional million dollars to the ten million dollar deficit we have, it's not an insignificant amount of money."

While the legal proceedings continue, the Institute will be paying the charges, Campbell said.

"We're quite optimistic that we have a good shot because it flies in the face of the law which says that cogen plants should not be discriminated against,"Campbell said.

Process could take several months

MIT's case "is very strong," said Andrew J. Newman, the attorney representing the Institute. "We've got a lot of support from all over the country."

"Basically, the decision by the department is out of left field, and very clearly in violation of federal law to encourage cogeneration."

MIT claims the ruling violates the 1978 Public Utilities Regulatory Policies Act and regulations of the Federal Energy Regulatory Commission, which promote cogeneration.

"There is no precedent for the department's order of stranded costs,"Newman said. Cogeneration plants have been built for many years, but this is the first time such a penalty has been levied.

The next step is for procedural filings and a certification of records from theDPU, Newman said. Legal briefs will be submitted to the court, followed by oral arguments, and ultimately a decision, all of which could take several months.